Wealth inequality in the United States is high and has increased sharply in recent decades. This increase—alongside a parallel increase in income inequality—has spurred increased attention to the implications of inequality for living standards and increased interest in policy instruments that can combat inequality.
Taxes on wealth are a natural policy instrument to address wealth inequality and could raise substantial revenue while shoring up structural weaknesses in the current income tax system. This issue could and should be a key issue in the upcoming presidential race.
The issue, however, is not clearly understood by most Americans. The following videos illustrate this. Hopefully, more of us will come to appreciate this problem and work to address it in 2020.
Taxing already taxed wealth is convoluted.
If you are referring to the double taxation of distributions made by C Corps, I agree. Otherwise, it is unclear what you are referring to.
The Cotton Chronicles, many people on the Left promote a wealth tax to pay for all of the programs they want. The problem is that that wealth was already taxed, so taxing it again is theft.
The U.S. federal income tax is based on a progressive tax system. A progressive tax takes a larger percentage of income from high-income groups than from low-income groups and is based on the concept of ability to pay. A progressive tax system might, for example, tax low-income taxpayers at 10 percent, middle-income taxpayers at 15 percent and high-income taxpayers at 30 percent. In the late 1950s and early 1960s, higher-income taxpayers paid 91% in taxes. Progressive income tax is widely accepted around the world. The point many make is that capital gains from investments are a form of ‘passive income’ and should be taxed as such. Wealth generates income and that income should be taxed as regular income in the existing progressive income tax system.
The Cotton Chronicles, do you support the tax system being progressive?
Along with a number of Nobel Prize-winning economists, I support graduated (progressive) income tax.
The Cotton Chronicles, after all taxes have been paid to the satisfaction of the government, government does not deserve anymore. Period.
The Cotton Chronicles, I would also like to get your thoughts on the estate tax. Personally, I find it to be distasteful.
Many countries have recognized that estate and inheritance taxes are a poor source of revenue and eliminated these taxes altogether. Given low revenue collections, high compliance costs, and a narrow base, the U.S. should seriously consider following suit. The US Estate Taxes rank 4th in OECD countries at 40%. Japan is the highest at 55%. Canada, Australia, New Zealand, Norway, and Sweden do not tax estates.
The Cotton Chronicles, what are your thoughts on the hypocrisy of people who demand free college and yet whine about people who inherit estates free of tax?
The Cotton Chronicles, what I don’t like is how hypocritical some people are when they demand free college education and act like all hell will break loose if people inherit fortunes. If someone has to pay estate tax, then a person should pay for that person’s college tuition.
Forgive me but this exchange could go on forever so let this response be it. In some countries, people fear the government. In other governments fear the people. To my mind, governments should be of and for the people. In this sense, the people ‘decide’ what taxes are reasonable. Similarly, people can and should decide what reasonable college tuition should be covered. Those in the highest income brackets should not get “free” tuition as it is reasonable that they pay full tuition. Education is extremely important and should not be undermined. Unfortunately, teaching salaries in the USA are too low. In Finland, teachers are paid as much as doctors and lawyers and all teachers have at least a Master’s degree.
The Cotton Chronicles, the only things that last forever are God and the universe.